New study reveals hourly wage treatment significantly impacts labor supply estimates.
Labor supply elasticities vary due to different modeling assumptions, not just frictions or adjustment costs. By testing 3,456 models, researchers found that how hourly wages are handled greatly impacts elasticity estimates. Choices in wage distribution modeling and wage imputation can lead to elasticities ranging from 0.2 to 0.65. It's crucial for researchers to ensure the robustness of their estimations regarding wage treatment.